During the fiscal year 2025 earnings call, Tesla CEO Elon Musk revealed that the company intends to largely halt manufacturing of its Model S and X electric cars starting next quarter. Musk explained that the era for these models is concluding respectfully, as the focus shifts toward an autonomous technology-driven future. Current inventory remains available for purchase, and Tesla commits to ongoing maintenance for owners. However, once supplies are depleted, production will not resume, with the Fremont facility's dedicated area being repurposed for building the Optimus humanoid robots.
Launched as Tesla's second car line in 2012, the Model S has been followed by the Model X SUV in 2015. Both have lost their earlier appeal amid evolving market preferences, with the more recent Model 3 and Y now accounting for the majority of deliveries. Throughout 2025, Tesla shipped 1,585,279 units of the Model 3 and Y, compared to just 418,227 for the S and X. Additionally, sales of these models ceased in China during the middle of 2025, as they were US imports affected by retaliatory tariffs stemming from US President Donald Trump's trade measures on foreign goods.
Musk outlined ambitions during the call to produce up to 1 million Optimus robots using the space previously allocated for Model S and X assembly. Just recently at the World Economic Forum in Davos, Switzerland, he disclosed plans to offer the robot to consumers by the close of the following year. Musk envisions Optimus as potentially the most significant product ever developed, surpassing even smartphones in impact. Yet, public showcases have yet to match the excitement generated, and the executive's projections often prove more ambitious than feasible.
The earnings disclosure further indicated a $2 billion allocation from Tesla to xAI, another venture led by Musk. In 2024, investors filed a lawsuit against him, contending that xAI poses a competitive threat to Tesla's interests. Musk has long positioned the company as a leader in artificial intelligence beyond its electric vehicle roots. Despite this, shareholders ratified his proposed compensation package worth $1 trillion at the end of 2025, contingent on achieving an $8.5 trillion valuation.